Sustainability is a popular topic; many investors are finding it satisfying to back companies that act fairly and responsibly, explains Brian Kelly, mutual fund specialist and editor of MoneyLetter.
Additionally, it is assume that responsible management practices will result in better-run and more profitable companies.
Sustainability is a subset of thematic investing, which enables investors to participate in long-term trends. At Fidelity, they have a stable of funds which over a range of strategies to appeal to different investing objectives.
When it comes to sustainable investing, Fidelity shares in the belief that responsible practices can be critical to an investment's long-term success. Sustainable investing at Fidelity enables investors to align their investments to outcomes shaped by environmental, social or governance (ESG) factors.
Where appropriate and aligned with a fund's investment objectives, Fidelity applies an ESG perspective direct to the products they offer. In broad terms, that means the Boston-based fund company has incorporated one or all of the ESG factors into their fundamental research.
These factors include:
* Environmental themes, such as investing in companies that are responding to consumer demand for sustainable practices.
* Social themes, such as investing in companies that are committed to a diverse and inclusive workplace.
* Governance themes, such as investing in companies committed to diverse board composition, strong oversight and shareholder friendly policies.
Why is Fidelity (and most of the fund companies across America) putting such emphasis on these responsible themes? It's because the market is demanding it.
According to Fidelity's research, two-thirds of retail customers say social impact is a key to their investing decisions.
There are several funds at Fidelity that focus on long-term themes tied to specific areas of sustainability:
Fidelity Environment & Alternative Energy Fund (FSLEX)
This fund focuses on alternative and renewable energy, energy efficiency, pollution control, water infrastructure, waste and recycling technologies, or other environmental support services. The YTD return through 7/31 was 17.8% and the 1-year return was 54%.
Fidelity Water Sustainability Fund (FLOWX)
This fund invests in companies helping to deliver safe, reliable and easily accessible water. The YTD return through 7/31 was 17.7% and the 1-year return was 41.5%.
Fidelity Women's Leadership Fund (FWOMX)
This fund invests in companies that prioritize and advance women's leadership and development. The YTD return through 7/31 was 16.2% and the 1-year return was 38.7%.
Fidelity Climate Action Fund (FCAEX)
This fund invests in companies that are removing, reducing or mitigating the effects of climate change. The fund's inception date was 6/15/21; as such, we do not have longer-term data.
Fidelity Environmental Bond Fund (FFEBX)
This fund invests in the debt of companies and projects that are recognizing, disclosing and reducing environmental risk. Like Fidelity Climate Action, this fund's inception date was 6/15/21; as such, we do not have longer-term data.